The Tax Times: FinCEN Updates Beneficial Ownership Reporting Requirements & FAQs

Thursday, August 8, 2024

FinCEN Updates Beneficial Ownership Reporting Requirements & FAQs

On March 7, 2024 we posted Treasury States That BOI Filing is Still Required for ALL But Plaintiffs in National Small Business United where we discussed that in National Small Business United v. Janet Yellen, a Northern District of Alabama Federal Judge ruled on March 1, 2024, that the CTA was unconstitutional. However, the Treasury Department's Financial Crimes Enforcement Network made its interpretation of the ruling clear in a statement issued by FinCEN stated that the ruling applies (ONLY) to the plaintiffs.

Now with the Corporate Transparency Act’s beneficial ownership reporting deadline looming, the Treasury’s Financial Crimes Enforcement Network (FinCEN) is continuing its outreach to businesses and refining its FAQs.

FinCEN has been collaborating with lawmakers around the country on education events over the last few months including an August 2 event in New York City with Representative Nydia Velázquez (D-NY).

They advised businesses to refer to the list of 23 exemptions available on FinCEN’s website but assured that if a business is in scope of the BOI rules, “you do not need an accountant or lawyer to file.” Further, small business owners showing good-faith efforts to comply “should not lose sleep” over the new requirements.

Also on July 24, FinCEN Issued revised BOI FAQs, including a New FAQ on “Disregarded Entities” and an Updated FAQ for Entities Needing to Obtain a Tax Identification Number.

FinCEN clarified that entities that are “disregarded” for U.S. tax purposes, meaning the entity’s owner reports on its tax return the entity’s income and deductions, still must report BOI if they fall within the definition of a “reporting company.”

Disregarded entities may report using different types of tax identification numbers depending on the circumstances, such as an Employer Identification Number, a Social Security Number, or an Individual Taxpayer Identification Number.

Foreign Reporting Companies Without A
Tax Identification Number May Need To
Provide One Issued By A Foreign Jurisdiction.

FinCEN also provided more detail on how new companies can obtain a tax identification number to ensure their BOI report is timely filed. Reporting companies may need to submit Form SS-4, Application for Employer Identification Number and foreign person responsible parties may need to submit that form by mail or fax, rather than via the online portal.

In addition, FinCEN clarified that reporting companies will not be able to submit their BOI report without a tax identification number. They should, however, request “all necessary information as early as practicable” and “consider retaining documentation associated with [their] efforts to comply with the BOI reporting requirements in a timely manner.”

On July 26, 2024 FinCEN issued yet another notice, this time clarifying that financial institution customers may be required to report BOI to FinCEN directly as well as to their financial institution as part of the federal customer due diligence requirements. The notice includes charts comparing reporting requirements under the Corporate Transparency Act and under the separate provision for financial institutions and it specifies that the required information and the definition of a “beneficial owner” do not completely align under the two reporting schemes.

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